In its first published accounts since announcing a new divisional structure, Communisis posted a pre-tax profit of £1.8m (H1 2009: £1.8m) on revenues of £98.1m (H1 2009: £95m).

While pre-tax profit was flat, operating profit improved marginally from £2.7m to £2.8m and the company improved its net debt position to £16.3m, compared with £16.8m at the end of last year.

Chief executive Andy Blundell said: "We're pretty happy with that progress through the first half of the year. We've got profits growing by 6%, we've got quite a significant further turnaround in cash, which is very positive, and we've got a net debt a bit better than it was at the end of 2009."

Blundell added that the company's strategy, including its repositioning as a "marketing services provider" and shift to a new divisional structure, was progressing well.

The company's Intelligence Driven Communications (IDC) segment made an operating profit of £2.1m, up from £1.4m in the first half of last year, representing a 16% return on sales of £12.9m (H1 2009: £11.5m).

This compared with a 4% return at the company's traditional Specialist Production and Sourcing (SPS) segment, which recorded an operating profit of £3.1m (H1 2009: £3.4m) on sales of £72.2m (H1 2009: £72.1m).

Communisis blamed the slow pace of recovery in the direct mail market and a reduction in volumes on two of its statement contracts for the reduced perfomance.

The company added that, while it expected traditional DM volumes to continue to decline, it was well-placed to capitalise on the trend towards smaller, more targeted campaigns.

Blundell said: "SPS markets are in transition as customers move towards new environments with the emphasis on visible cost controls coupled with a willingness to outsource more services.

"The short-term situation in SPS is stabilising and we are confident of improving performances from direct mail and transactional services in H2."

Meanwhile, the company revealed that it had been able to keep a lid on its net capex costs thanks to the successful disposal of two of the three redundant web presses at its Leeds site.

In addition, Communisis revealed that the HP T300 that it installed at its Leeds facility earlier this year was financed through an operating lease, further reducing its 2010 capex.

As a result, net capital expenditure costs for the first half came in at £400,000, compared with £2.8m in the same period last year, on an underlying investment of £4.7m.

Commenting on the HP T300 deal, finance director Peter King said: "We get a bit more flexibility through the operating lease route here and the opportunity to upgrade more rapidly in the event that the technology develops more quickly.

"There's plenty of debt capacity there – we could easily have paid outright for the machine if we'd wanted to but this is about retaining flexibility with the equipment."

The company also announced a £7m reduction in its previously £40m pension deficit and confirmed that it expected to hit its full-year earnings targets.

Despite the positive nature of Communisis's interim results, the company's share price had fallen 15.5% to 24.5p at the time of writing, although this followed a speculative spike in the company's stock that had taken it from around 25p to 30p in the past week.

Blundell attributed the movement to short-term speculation and added that the trend in Communisis's share price was "strongly upward".